HARARE – Deputy Finance Minister, David Mnangagwa, the son of President Emmerson Mnangagwa, has acknowledged the public’s reluctance to use banks, admitting they ‘innocently’ hoard cash due to a broken trust.
Zimbabwe’s financial services sector has in the past been hit by periods of hyperinflation and currency changes. The frequent policy changes and currency fluctuations further eroded trust among the banking public.
People in the past watched in horror as their savings dwindled to nothing. The relentless economic storm that has gripped the country for more than two decades has left them with no confidence in the financial systems.
Makonde MP Simbarashe Ziyambi on Wednesday asked David Mnangagwa to explain government policy regarding people who are “hoarding large sums of cash in safes in their houses and these people are not putting that money in circulation.”
The Deputy Minister responded by admitting that people ‘innocently’ hoard large sums of cash because they do not have confidence in the local banking sector.
“Government policy is that we are in a multicurrency regime. What this entails is that one can choose to hold value in United States dollars. Such United States dollars can either be in cash or can be in their nostro.
“This strategy that we have where people are keeping cash in boxes in their houses or in safes might speak to the confidence in the banking system which are also issues that are being addressed,” he said.
“We will not endeavour to compel people to remove money from their safekeeping places.
“I am sure my fellow Minister of Home Affairs would advise against that, but as Treasury and as the Ministry of Finance, Economic Development and Investment Promotion, we will not be looking as to where and in what form one is keeping their personal finances.”
Beyond the historical factors, practical concerns seemingly added to the public’s hesitation to use banks. Long queues, limited access in rural areas, and high bank charges created a sense of frustration and alienation.
Accordingly, the banking system, meant to be a safe haven, is distant and inaccessible to many, pushing them towards alternative methods like keeping their money hidden away.
The Minister said the government is seized with the issue of regaining public confidence. They are also working on introducing a “structured currency” which will be backed by gold reserves while being managed by the currency board.
